How Canadians struggled to adapt to the GST

Confusion reigned the day after Canada's new Goods and Services Tax was introduced on Jan. 1, 1991.

Condoms, yes. Home pregnancy tests, no.

'Full-blown head-scratching confusion'

31 years ago
On the second day the GST is in effect, Canadians have a lot of questions about what it means for them. 3:03

Confusion reigned the day after Canada's new Goods and Services Tax of seven per cent was introduced on Jan. 1, 1991.

Whether they were paying it or charging it, Canadians were unclear on what was expected and what to expect — and it only got worse on Jan. 2.

"That kind of uncertainty, first evident yesterday, turned into full-blown head-scratching confusion today," said Peter Mansbridge, host of CBC's The National

Reporter Tom Kennedy surveyed scenes across the country in which the struggle was real.

Taxi rides: taxed

New taxi meters that calculated the GST had to be installed in drivers' cars in Toronto. (The National/CBC Archives)

In Toronto, taxi drivers lined up — and paid $35 plus GST for the privilege — to install new meters in their cars that would add the GST to each fare. 

The phones were ringing at Ottawa call centres set up for the purpose of demystifying the tax.

An estimated 10,000 calls had already come in to one GST information office, and there were two more like it.

A typical question: what happens to the price of big-ticket items?

Kennedy said Ottawa had pledged that prices would come down because there was no more Manufacturers Sales Tax.

"The net gain at the register .. means a net saving of about $14 on that saw today," said a salesman at a Canadian Tire store.

Kitty litter: uncertain 

"I don't know what to charge tax on," said a woman selling accessories in Montreal. (The National/CBC Archives)

Many store owners just didn't know what to charge GST on.

A woman at a pet store, flipping through a sheaf of papers, said she just wasn't sure if the GST should apply to cat gravel.   

What about fashion accessories?

"Out of clothing we charge on everything, but I don't know how much to charge [on accessories]," said a woman next to a mall kiosk.

In Regina, the GST was charged inconsistently on milk in "small containers," depending who was selling it.

"Taxed in this drugstore, tax-free in this grocery store," said Kennedy, as the camera showed a bright-pink sign in the drugstore reading "GST?" plus a check mark indicating Yes.

Pregnancy tests: untaxed

The Goods and Services Tax applied to condoms, but not to home pregnancy tests. (The National/CBC Archives)

Condoms were accompanied by the same sign — they were taxed.

But home pregnancy tests were not, a scenario Kennedy said led to some questions about "tax logic."

Other places were avoiding the logic problem altogether and taking a different approach to the GST.

"If anybody wants to come down and get some ice cream before the GST is put on, today's the day!" said a woman in a Montreal shop awaiting a new GST-enabled cash register.

A Newfoundland cosmetics retailer was absorbing the tax as a "marketing tool."   

Yet another option was not paying it at all, like a Montreal falafel shop.

"It's crazy," said the owner, who suggested the timing was all wrong for charging such a tax and was refusing to pay it "on principle," according to Kennedy.

The tax was cut to six per cent in July 2006 and further to five per cent in January 2008, where it remains.